McHenry Times

Cook County could lose $87 million in federal funding because of its attempt to increase revenue through the recently imposed 1-cent-per-ounce beverage tax, Rep. Steve Reick (R-Woodstock) posted recently on his www.steve463.com website.

“This all stems from the fact that items purchased using a SNAP card are exempt from sales tax,” Reick wrote. “The Feds are saying that unless Cook County finds an acceptable workaround to allow for the purchase of SNAP-eligible items exempt from the new sales tax, federal funds are at risk. First, the county was apparently informed of this back in June, but it went ahead and imposed it (the tax) anyway. It would appear that gluttony isn’t a vice reserved to individuals."

According to a Chicago Tribune report, county officials tried to plan around the Supplemental Nutrition Assistance Program (SNAP) taxation issue when it was raised in June. The county originally planned to have retailers add the 1-cent-per-ounce tax to the cost of sugary beverages, which would have gotten around the federal prohibition on applying state and local sales taxes to SNAP purchases. That plan ran afoul of the Illinois Department of Revenue, as it would have increased the taxes applied to normal purchases: If the product price were increased, then the state and local tax would be applied to the combined price of the product and the new tax.

Rep. Steve Reick (R-Woodstock)

As an alternative, the county determined that retailers should apply the tax at the point of sale, then offer an immediate refund for the amount taxed on SNAP purchases. According to the Tribune, a Cook County official recently released a statement saying that the county believed this was at least temporarily acceptable.

The federal government, however, had previously issued a memo saying retailers cannot apply taxes to SNAP purchases at any point, and that the refund workaround is still a violation of federal law.

In his post, Reick called the impasse “hilarious,” pointing out that the Cook County ordinance to fight sugar consumption is being quickly rushed into effect without consideration of its administration. At the same time, a program intended to promote health is now fighting for people to be able to access sugary drinks without additional cost burdens.

“… Most hilarious of all, one of the stated goals of the SNAP program, straight from the IDHS website, is to ‘help low-income people and families buy the food they need for good health,’” Reick posted. “Nothing screams ‘good health’ like a 2-liter bottle of Mountain Dew.”

Reick noted that the SNAP issue is not the only challenge the tax has faced. The Illinois Retail Merchants Association (IRMA) challenged it on constitutional grounds and gained a temporary restraining order that delayed the tax for a month.  The county responded by suing for $17 million, which is the amount it said it stood to gain had the tax went into effect in July, as scheduled. While that motion has since been withdrawn, it has prompted proposals for a county ordinance and state law to block similar punitive lawsuits from government entities.

“… There’s a silver lining around this particular dark cloud," Reick wrote. "Since drinks purchased using SNAP benefits are tax-exempt, I will lay a dollar to a donut that some bright entrepreneurial SNAP recipient is already buying up every 12 pack of pop in sight with an eye to creating a business selling 'loosies.' Ah, capitalism, it works everywhere it’s tried.”